The distinction between periodic tenancies and tenancies at will is extremely important to both Landlords and Tenants. For a landlord that requires possession of the property, this distinction is critical.
A periodic business tenancy that has arisen in this way will be entitled to security of tenure under the Landlord and Tenancy Act 1954 (“the Act”). They arise and reoccur every “period”, usually calculable by reference to the rent periods. Tenancies at will are terminable on immediate notice by either party. The flexibility is beneficial for both landlords who wish to take back possession at short notice and tenants who wish to vacate quickly.
For various commercial/practical reasons, it will not always be possible to formalise a tenant’s occupation before it takes a possession of a premises or when the lease expires.
Barclays Wealth Trustees (Jersey) Ltd v Erimus Housing Ltd  EWCA Civ 303
The Court of Appeal has provided guidance on this key distinction where a tenant remains in occupation after the lease has expires.
The Tenant was in occupation of a business premises with a 5-year lease which was outside the security provisions of the Act. The lease was due to expire in October 2009.
Negotiations for a new lease commenced between the parties in May 2009 but no new lease had been completed before the end of the term. The tenant remained in occupation and continued to pay rent as it had done.
Parties continued to negotiate terms which became protracted and in June 2011 the terms were agreed. However, the lease did not complete and in June 2012 the tenant’s solicitor served a notice to quit. The Tenant vacated on 28 September 2012.
The Landlord refused to accept this position and claimed that a period tenancy had arisen.
The decision of the High Court was overturned by the Court of Appeal who found in favour of the Tenant and held that the tenant had been occupying the premises under a tenancy at will.
Although the tenant continued to pay rent, the negotiations for the new lease had never been abandoned. An agreement was reached in June 2011. It would therefore be difficult to ascertain when the periodic tenancy commenced.
A period tenancy cannot be inferred from the payment of rent alone.
The new lease would have been outside of the Act as the old one was and to infer a periodic tenancy would be inconsistent with this.
Therefore, nothing in the negotiations was consistent with the creation of a periodic tenancy in advance of the grant of a new lease.
Whether you are a tenant or a landlord, the unintended consequences that can arise if a tenant holds over can be avoided if appropriate advice is taken before the end of the lease term.
To discuss any aspect of commercial leases or the tenant eviction process feel free to contact ours specialist commercial lease solicitors in Manchester on 0161 820 8888 or solicitor in London on 0208 889 8888 and speak to one of our experienced members in the Leasehold Team.
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